Npower announces tariff rises

Saturday 5 January 2008 00:01 BST

One of Britain's biggest power companies has announced price hikes of 17.2% for gas and 12.7% for electricity in a move set to hit more than four million households.

Npower said customers will see annual bills jump on average by £95 for gas and £64 for electricity under the price changes, due to come into effect on Saturday. The price rises will push Npower's average dual gas and electricity bills to more than £1,000.

Experts predicted that other energy suppliers will follow suit soon with prices rises of their own, spelling gloom for households this winter.

Npower - the UK's fourth biggest energy supplier - blamed the decision to increase prices on steep rises in wholesale gas and electricity costs, which it claimed have risen by more than 60% since the middle of last February. It added that gas distribution costs had also contributed to price pressures and Npower also announced that its gas prices will vary regionally for the first time to reflect gas transportation costs. The change will mean gas price rises vary from 15% to almost 24% for some Npower customers.

London and the East Midlands will be hit with the highest increases, with some single fuel customers suffering a 23.8% rise. Parts of Wales and Scotland will see their bills upped the least.

Npower said competitors Scottish Power and Scottish and Southern have already introduced regional gas prices, while British Gas announced last year that it was set to switch to the new tariff structure soon. Electricity prices already vary across the regions and Npower said prices will rise from 8.7% in areas of Wales and Scotland, up to 27% for some customers in the East Midlands.

Giuseppe Di Vita, managing director of Npower's residential business, said: "(The) decision was not an easy one. We always try to protect our customers for as long as possible, but sadly higher energy prices are a fact of life. Npower is not alone in facing these higher costs, and we expect other suppliers to follow suit very shortly. Anyone struggling to pay their bills, regardless of the time of year, should get in touch immediately."

Npower, which is owned by German company RWE, has already increased its online tariff for new customers, upping bills by 17% the week before Christmas. British Gas parent Centrica also last month announced increases to its market tracker price, increasing bills by 13% for gas and 15% for electricity. It also warned less than two weeks later that wholesale prices left the energy industry facing a "difficult environment" in 2008, signalling that prices were set to rise across the board.

Charities warned that vulnerable members of society could be forced to choose between food and heating as fuel bills soar. Karen Darby, from SimplySwitch, said: "Analysts were predicting gas price rises of around 15%. However, if the other suppliers follow npower's lead and raise prices by over 17%, householders will really feel the pinch."

Old people and those who have previously been homeless will be most affected by the rise in prices, charities said. Fuel poverty charity National Energy Action (NEA) said they were "deeply concerned" about the impact of price rises on poor and vulnerable households. Jenny Saunders, NEA chief executive, said: "These are high price rises which, for many households on low incomes, will be deeply worrying news. For many people, particularly the vulnerable, price hikes mean very real decisions between choosing to heat their home or doing without other essentials."